EX-99.1 2 l37980exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(AGILYSYS LOGO)
Agilysys Reports Unaudited Fiscal 2010 Second-Quarter
and First-Half Results
  •   Quarterly Net Income from Continuing Operations Improves Sharply to $2.9 Million, or $0.12 Per Diluted Share, on 9% Lower Revenue
 
  •   Revenue Increases 20% Sequentially
 
  •   Debt Free With $48.2 Million Cash on Hand at Sept. 30 vs $36.2 Million at Fiscal Year-End
CLEVELAND—Nov. 4, 2009—Agilysys, Inc. (Nasdaq: AGYS), a leading provider of innovative IT solutions, today announced unaudited financial results for the fiscal 2010 second quarter and first half ended September 30, 2009.
Second-Quarter Unaudited Results of Operations
Revenue declined 9.0% to $156.0 million, compared with $171.4 million in the second quarter of fiscal 2009. Hardware sales declined 3.5%, services declined 32.6% and software sales increased 14.0%. Consolidated revenues rebounded 19.8% from the $130.2 million reported in the first quarter, due to double-digit growth in hardware, software and services.
Cost-cutting initiatives and lower acquisition-related intangible amortization drove selling, general and administrative (SG&A) expense down $12.4 million, or 23.9%, to $39.6 million. The Company recently executed an additional $9 million in annual savings of which approximately $4 million will be realized in the second half of fiscal 2010.
The Company’s operating income, excluding restructuring and asset impairment charges (“Charges”), improved $6.2 million to $4.3 million from the operating loss of $1.9 million last year. Lower sales and gross profit year-over-year were more than offset by lower SG&A expense. Adjusted EBITDA (operating income plus depreciation and amortization), excluding Charges, increased 44.9% to $7.4 million for the quarter, compared with $5.1 million a year ago.
Agilysys reported net income from continuing operations of $2.9 million, or $0.12 per diluted share, a significant increase from the loss of $105.3 million, or a loss of $4.66 per share, recorded in the previous year.
“We are pleased to report strong sequential growth in sales and positive net earnings for the quarter. The improvement in profitability reflects the tangible benefits realized from our cost-saving efforts,” said Martin Ellis, President and Chief Executive Officer. “In addition to improved bottom-line performance, our order pipeline has started to show modest recovery from the depressed levels of the past several quarters.”
Fiscal 2010 First-Half Unaudited Results of Operations
First-half 2010 revenue was $286.2 million compared with revenue of $351.2 million in the first six months of 2009. Revenue in the first half of fiscal 2010 decreased 18.5% reflecting lower sales in each of the company’s three business segments. Hardware declined 13.6%, services declined 36.3% and software decreased 8.2%.
SG&A expense declined $23.7 million, or 22.0%, to $84.1 million, largely due to cost reductions. Approximately $44 million in annual costs have been eliminated since the first quarter of fiscal year 2009 when the company began aggressively reducing SG&A expenses to align cost structure with deteriorating
AGILYSYS, INC. • 28925 FOUNTAIN PARKWAY • SOLON, OH 44139 • WWW.AGILYSYS.COM

 

 

market demand. Adjusted EBITDA, excluding Charges, was $1.1 million for the six-month period, versus $3.3 million in the comparable period of fiscal 2009.
For the first six months of fiscal 2010, the company reported a net loss from continuing operations of $9.5 million, or a loss of $0.42 per share, compared with a net loss from continuing operations of $165.4 million, or a loss of $7.33 per share, in the first six months of fiscal 2009.
Business Outlook
The year-over-year declines in revenue have moderated and while some economic indicators have improved, market conditions still reflect uncertainty regarding the overall business environment and demand for IT products. Ellis commented: “The business is stabilizing, our pipeline has improved, and we expect to see a seasonal increase in sales in our third quarter ending December. As we look to the balance of fiscal 2010, we plan to continue to focus on those items under our control that can help produce tangible improvements in results. Near-term, we are optimistic regarding our outlook for the third quarter of the fiscal year and expect financial performance in second half to improve versus the first half.”
Conference Call Information
A conference call will be held at 11:00 a.m. ET on November 4, 2009 to review unaudited second-quarter and first-half fiscal 2010 results. A slide deck will be the basis for the review. Both the slide deck and the conference call can be accessed via the Investor Relations section of www.agilysys.com. In addition, a replay of the call will be archived on the Web site. If you are unable to participate during the live webcast, the call will be archived at the Investor Relations section of www.agilysys.com.
Forward-Looking Language
This release contains certain management expectations, which may constitute forward-looking information within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities and Exchange Act of 1934 and the Private Securities Reform Act of 1995. Forward-looking information speaks only as to the date of this presentation and may be identified by use of words such as “may,” “will,” “believes,” “anticipates,” “plans,” “expects,” “estimates,” “projects,” “targets,” “forecasts,” “continues,” “seeks,” or the negative of those terms or similar expressions. Many important factors could cause actual results to be materially different from those in forward-looking information including, without limitation, competitive factors, disruption of supplies, changes in market conditions, pending or future claims or litigation, or technology advances. No assurances can be provided as to the outcome of cost reductions, business strategies, future financial results, unanticipated downturns to our relationships with customers, unanticipated difficulties integrating acquisitions, new laws and government regulations, interest rate changes, and unanticipated deterioration in economic and financial conditions in the United States and around the world. We do not undertake to update or revise any forward-looking information even if events make it clear that any projected results, actions, or impact, express or implied, will not be realized.
Other potential risks and uncertainties that may cause actual results to be materially different from those in forward-looking information are described in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC), under Item 1A, “Risk Factors.” Copies are available from the SEC or the Agilysys website.
Use of Non-GAAP Financial Information
To supplement the unaudited condensed consolidated financial statements presented in accordance with U.S. GAAP in this release, certain non-GAAP financial measures as defined by the SEC rules are used. Management believes that such information can enhance investors’ understanding of the Company’s ongoing operations and is a measure used in the Company’s debt agreement. The non-GAAP measures included in this release have been reconciled to the comparable GAAP measures within an accompanying table, shown on the last page of this release.
AGILYSYS, INC. • 28925 FOUNTAIN PARKWAY • SOLON, OH 44139 • WWW.AGILYSYS.COM

 

 

About Agilysys, Inc.
Agilysys is a leading provider of innovative IT solutions to corporate and public-sector customers, with special expertise in select markets, including retail and hospitality. The Company uses technology—including hardware, software and services—to help customers resolve their most complicated IT needs. The Company possesses expertise in enterprise architecture and high availability, infrastructure optimization, storage and resource management, identity management and business continuity; and provides industry-specific software, services and expertise to the retail and hospitality markets. Headquartered in Cleveland, Agilysys operates extensively throughout North America, with additional sales offices in the United Kingdom and Asia.
News releases and other information on Agilysys are available on the Internet at: www.agilysys.com.
# # #
Investor Contact:
Curtis Stout
Vice President and Treasurer
Agilysys, Inc.
440-519-8635
curtis.stout@agilysys.com
Media Contact:
Maureen Morreale
Senior Communications Manager
Agilysys, Inc.
440-519-8161
maureen.morreale@agilysys.com
AGILYSYS, INC. • 28925 FOUNTAIN PARKWAY • SOLON, OH 44139 • WWW.AGILYSYS.COM

 

 

AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                                 
    Three Months Ended     Six Months Ended  
    Sep 30,     Sep 30,  
(In thousands, except share and per-share data)   2009     2008     2009     2008  
Net sales:
                                
Products
   $ 126,925     $ 128,313     $ 231,818     $ 265,892  
Services
     29,070       43125       54,367       85,297  
 
                        
Total net sales
     155,995       171,438       286,185       351,189  
Cost of goods sold:
                                
Products
     99,623       99,449       185,503       212.890  
Services
     12,499       21,881       24,958       41,169  
 
                        
Total cost of goods sold
     112,122       121,330       210,461       254,059  
 
                        
Gross margin
     43,873       50,108       75,724       97,130  
Selling, general and administrative expenses
     39,618       52,032       84,144       107,834  
Asset impairment charges
     —       112,020       —       145,643  
Restructuring charges
     54       510       68       23,573  
 
                        
Operating income (loss)
     4,201       (114,454 )     (8,488 )     (179,920 )
Other expense (income):
                                
Other expense (income), net
     81       (242 )     (390 )     (480 )
Interest income
     (9 )     (215 )     (42 )     (462 )
Interest expense
     253       197       460       452  
 
                        
Income (loss) before income taxes
     3,876       (114,194 )     (8,516 )     (179,430 )
Income tax expense (benefit)
     988       (8,917 )     1,003       (14,080 )
 
                        
Income (loss) from continuing operations
     2,888       (105,277 )     (9,519 )     (165,350 )
Loss from discontinued operations
     (52 )     (1,312 )     (41 )     (1,274 )
 
                        
Net income (loss)
   $ 2,836     $ (106,589 )   $ (9,560 )   $ (166,624 )
 
                        
 
                                
Income (loss) per share — basic
                                
Income (loss) from continuing operations
   $ 0.13     $ (4.66 )   $ (0.42 )   $ (7.33 )
Loss from discontinued operations
     (0.00 )     (0.06 )     (0.00 )     (0.05 )
 
                        
Net income (loss)
   $ 0.13     $ (4.72 )   $ (0.42 )   $ (7.38 )
 
                        
 
                                
Income (loss) per share — diluted
                                
Income (loss) from continuing operations
   $ 0.12     $ (4.66 )   $ (0.42 )   $ (7.33 )
Loss from discontinued operations
     (0.00 )     (0.06 )     (0.00 )     (0.05 )
 
                        
Net income (loss)
   $ 0.12     $ (4.72 )   $ (0.42 )   $ (7.38 )
 
                                
Weighted average shares outstanding
                                
Basic
     22,625,654       22,601,549       22,626,491       22,569,206  
Diluted
     22,879,030       22,601,549       22,626,491       22,569,206  
 
                                
Cash dividends per share
   $ 0.03     $ 0.03     $ 0.06     $ 0.06  
AGILYSYS, INC. • 28925 FOUNTAIN PARKWAY • SOLON, OH 44139 • WWW.AGILYSYS.COM

 

 

AGILYSYS, INC.
BUSINESS SEGMENT INFORMATION (UNAUDITED)
                                 
    Three Months Ended     Six Months Ended  
    Sep 30,     Sep 30,  
(In thousands)   2009     2008     2009     2008  
Hospitality (HSG)
                                
Total revenue
   $ 23,836     $ 23,488     $ 40,386     $ 48,242  
Elimination of intersegment revenue
     (514 )     (43 )     (1,057 )     (82 )
 
                        
Revenue from external customers
   $ 23,322     $ 23,445     $ 39,329     $ 48,160  
 
                        
Gross margin
   $ 14,237     $ 14,435     $ 23,777     $ 28,844  
 
                        
 
     61.0 %     61.6 %     60.5 %     59.9 %
Depreciation and amortization
   $ 1,104     $ 1,855     $ 2,227     $ 3,186  
Operating income (loss)
     3,997       (102,906 )     2,095       (108,765 )
 
                        
Adjusted EBITDA
   $ 5,101     $ (101,051 )   $ 4,322     $ (105,579 )
 
                        
Goodwill and intangible asset impairment
   $ —     $ 103,387     $ —     $ 110,852  
 
                                
Retail (RSG)
                                
Total revenue
   $ 23,582     $ 29,437     $ 47,970     $ 67,704  
Elimination of intersegment revenue
     (19 )     (148 )     (20 )     (316 )
 
                        
Revenue from external customers
   $ 23,563     $ 29,289     $ 47,950     $ 67,388  
 
                        
Gross margin
   $ 4,694     $ 6,094     $ 10,070     $ 14,493  
 
                        
 
     19.9 %     20.8 %     21.0 %     21.5 %
Depreciation and amortization
   $ 44     $ 53     $ 94     $ 141  
Operating income (loss)
     1,133       (5,942 )     2,763       (20,314 )
 
                        
Adjusted EBITDA
   $ 1,177     $ (5,889 )   $ 2,857     $ (20,173 )
 
                        
Goodwill impairment
   $ —     $ 6,549     $ —     $ 24,910  
 
                                
Technology (TSG)
                                
Total revenue
   $ 109,126     $ 120,047     $ 198,950     $ 238,748  
Elimination of intersegment revenue
     (16 )     (1,343 )     (44 )     (3,107 )
 
                        
Revenue from external customers
   $ 109,110     $ 118,704     $ 198,906     $ 235,641  
 
                        
Gross margin
   $ 24,909     $ 29,009     $ 42,638     $ 51,446  
 
                        
 
     22.8 %     24.4 %     21.4 %     21.8 %
Depreciation and amortization
   $ 817     $ 4,061     $ 4,768     $ 8,534  
Operating income (loss)
     6,320       5,732       3,786       (26,313 )
 
                        
Adjusted EBITDA
   $ 7,137     $ 9,793     $ 8,554     $ (17,779 )
 
                        
Goodwill impairment
   $ —     $ 2,084     $ —     $ 9,881  
Restructuring charge
   $ —     $ 510     $ —     $ 23,573  
AGILYSYS, INC. • 28925 FOUNTAIN PARKWAY • SOLON, OH 44139 • WWW.AGILYSYS.COM

 

 

AGILYSYS, INC.
BUSINESS SEGMENT INFORMATION
(Unaudited)
                                 
    Three Months Ended     Six Months Ended  
    Sep 30,     Sep 30,  
(In thousands)   2009     2008     2009     2008  
Corporate / Other
                                
Gross margin
   $ 33     $ 570     $ (761 )   $ 2,347  
 
                        
Depreciation and amortization (a)
   $ 1,205     $ 1,079     $ 2,409     $ 2,098  
Operating loss
     (7,249 )     (11,338 )     (17,132 )     (24,528 )
 
                        
Adjusted EBITDA
   $ (6,044 )   $ (10,259 )   $ (14,723 )   $ (22,430 )
 
                        
Restructuring charge
   $ 54     $ —     $ 68     $ —  
 
                                
Consolidated
                                
Total revenue
   $ 156,544     $ 172,972     $ 287,306     $ 354,694  
Elimination of intersegment revenue
     (549 )     (1,534 )     (1,121 )     (3,505 )
 
                        
Revenue from external customers
   $ 155,995     $ 171,438     $ 286,185     $ 351,189  
 
                        
Gross margin
   $ 43,873     $ 50,108     $ 75,724     $ 97,130  
 
                        
 
     28.1 %     29.2 %     26.5 %     27.7 %
Depreciation and amortization (a)
   $ 3,170     $ 7,048     $ 9,498     $ 13,959  
Operating income (loss)
     4,201       (114,454 )     (8,488 )     (179,920 )
 
                        
Adjusted EBITDA
   $ 7,371     $ (107,406 )   $ 1,010     $ (165,961 )
 
                        
Goodwill and intangible asset impairment
   $ —     $ 112,020     $ —     $ 145,643  
Restructuring charge
   $ 54     $ 510     $ 68     $ 23,573  
 
(a)   Does not include the amortization of deferred financing fees totaling $132 and $57 for the three months ended Sept. 30, 2009 and 2008, respectively, and $220 and $113 for the six months ended Sept. 30, 2009 and 2008, respectively, all of which related to the Corporate/Other segment.
AGILYSYS, INC. • 28925 FOUNTAIN PARKWAY • SOLON, OH 44139 • WWW.AGILYSYS.COM

 

 

AGILYSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
                 
    Sep 30,     Mar 31,  
    2009     2009  
(In thousands)   (Unaudited)          
ASSETS
                
Current assets:
                
Cash and cash equivalents
   $ 48,197     $ 36,244  
Accounts receivable, net
     125,166       151,944  
Inventories, net
     22,036       27,216  
Deferred income taxes — current, net
     6,845       6,836  
Prepaid expenses and other current assets
     5,337       4,564  
Income taxes receivable
     3,874       3,871  
Assets of discontinued operations — current
     285       1,075  
 
            
Total current assets
     211,740       231,750  
Goodwill
     50,563       50,382  
Intangible assets, net
     29,877       35,699  
Deferred income taxes — non-current, net
     511       511  
Other non-current assets
     18,467       29,008  
Assets of discontinued operations — non-current
     —       56  
Property and equipment, net
     29,471       27,030  
 
            
Total assets
   $ 340,629     $ 374,436  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
Current liabilities:
                
Accounts payable
   $ 92,832     $ 28,042  
Floor plan financing
     —       74,159  
Deferred revenue
     20,435       18,709  
Accrued liabilities
     20,665       37,807  
Long-term debt — current
     195       238  
Liabilities of discontinued operations — current
     575       1,176  
 
            
Total current liabilities
     134,702       160,131  
Other non-current liabilities
     21,827       21,588  
Shareholders’ equity:
                
Common shares, without par value, at $0.30 stated value; authorized 80,000,000 shares; 31,606,831 shares issued and 23,031,119 shares outstanding at Sep 30, 2009
     9,370       9,366  
Treasury stock (8,575,712 and 8,896,778 shares at Sep 30, 2009, and Mar 31, 2009, respectively)
     (2,670 )     (2,670 )
Capital in excess of stated value
     (9,934 )     (11,036 )
Retained earnings
     189,027       199,947  
Accumulated other comprehensive loss
     (1,693 )     (2,890 )
 
            
Total shareholders’ equity
     184,100       192,717  
 
            
Total liabilities and shareholders’ equity
   $ 340,629     $ 374,436  
 
            
AGILYSYS, INC. • 28925 FOUNTAIN PARKWAY • SOLON, OH 44139 • WWW.AGILYSYS.COM

 

 

AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                 
    Six Months Ended  
    Sep 30,  
(In thousands)   2009     2008  
Operating activities:
                
Net loss
   $ (9,560 )   $ (166,624 )
Add: Loss from discontinued operations
     41       1,274  
 
            
Loss from continuing operations
     (9,519 )     (165,350 )
Adjustments to reconcile net loss from continuing operations to net cash provided by (used for) operating activities (net of effects from business acquisitions):
                
Impairment of goodwill and intangible assets
     —       166,223  
Gain on redemption of cost basis investment
     —       (51 )
Gain on partial redemption of investment in The Reserve Fund’s Primary Fund
     (70 )     —  
Loss on the sale of securities
     91       —  
Depreciation
     1,891       1,927  
Amortization
     7,827       12,145  
Deferred income taxes
     (9 )     (18,372 )
Stock-based compensation
     1,073       2,152  
Changes in working capital:
                
Accounts receivable
     26,778       32,699  
Inventories
     5,180       2,001  
Accounts payable
     65,150       (76,327 )
Accrued and other liabilities
     (15,309 )     (40,816 )
Income taxes payable
     (798 )     946  
Other changes, net
     (866 )     (3,252 )
Other non-cash adjustments
     (2,357 )     (2,487 )
 
            
Total adjustments
     88,581       76,788  
 
            
Net cash provided by (used for) operating activities
     79,062       (88,562 )
 
                
Investing activities:
                
Proceeds from (claim on) The Reserve Fund’s Primary Fund
     2,337       (7,657 )
Proceeds from redemption of cost basis investment
     —       7,172  
Proceeds from the borrowings against company-owned life insurance policies
     12,500       —  
Change in cash surrender value of company-owned life insurance policies
     (107 )     (103 )
Acquisition of businesses, net of cash acquired
     —       (2,381 )
Purchase of property and equipment
     (5,923 )     (2,603 )
 
            
Net cash provided by (used for) investing activities
     8,807       (5,572 )
 
                
Financing activities:
                
Floor plan financing agreement, net
     (74,159 )     75,551  
Proceeds from borrowings under credit facility
     5,000       —  
Principal payments under credit facility
     (5,000 )     —  
Principal payment under long-term obligations
     (206 )     (47 )
Issuance of common shares
     33       —  
Debt financing costs
     (1,520 )     —  
Dividends paid
     (1,360 )     (1,358 )
 
            
Net cash used for (provided by) financing activities
     (77,212 )     74,146  
 
                
Effect of exchange rate changes on cash
     1,092       (101 )
 
            
Cash flows provided by (used for) continuing operations
     11,749       (20,089 )
Cash flows of discontinued operations:
                
Operating cash flows
     204       (29 )
Investing cash flows
     —       35  
 
            
Net increase (decrease) in cash
     11,953       (20,083 )
Cash at beginning of period
     36,244       69,935  
 
            
Cash at end of period
   $ 48,197     $ 49,852  
 
            
AGILYSYS, INC. • 28925 FOUNTAIN PARKWAY • SOLON, OH 44139 • WWW.AGILYSYS.COM

 

 

AGILYSYS, INC.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(Unaudited)
                                 
    Three Months Ended     Six Months Ended  
    Sep 30,     Sep 30,  
(In thousands)   2009     2008     2009     2008  
Net income (loss)
   $ 2,836     $ (106,589 )   $ (9,560 )   $ (166,624 )
Plus:
                                
Interest expense, net
     244       (18 )     418       (10 )
Other income, net
     81       (242 )     (390 )     (480 )
Income tax expense (benefit)
     988       (8,917 )     1,003       (14,080 )
Depreciation and amortization expense (a)
     3,170       7,048       9,498       13,959  
Loss from discontinued operations, net of tax
     52       1,312       41       1,274  
 
                        
Adjusted EBITDA
     7,371       (107,406 )     1,010       (165,961 )
Asset impairment charges
     —       112,020       —       145,643  
Restructuring charges
     54       510       68       23,573  
 
                        
Adjusted EBITDA excluding asset impairment and restructuring charges
   $ 7,425     $ 5,124     $ 1,078     $ 3,255  
 
                        
 
(a)   Depreciation and amortization expense excludes amortization of deferred finance costs, totaling $132 and $57 for the three months ended Sept. 30, 2009 and 2008, respectively, and totaling $220 and $113 for the six months ended Sept. 30, 2009 and 2008, respectively, as such costs are already included in interest expense, net.
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